The
U.S. Chamber of Commerce and restaurant and retail groups urged the Eleventh Circuit in an amicus brief Wednesday to side with Enterprise in a dispute over whether employers' obligations to alert workers to layoffs under the WARN Act apply to coronavirus-related closures.
The Chamber, along with the
Restaurant Law Center and
National Retail Federation, argued that the lower court interpreted the natural disasters exception of the Worker Adjustment and Retraining Notification Act so narrowly that it effectively nullified it. The statute makes it illegal for companies to fire 50 or more people at once without giving them two months' notice, but Congress provided an exception for layoffs caused by natural disasters.
According to the amici, the lower court got it wrong when it held that the exception requires employers to show that the layoffs came as a direct cause of a natural disaster.
"Direct cause is typically fact-intensive and hard to resolve early in litigation," they said. "As a result, the lower court decision functionally eliminates the natural disaster exception by making it as hard to resolve as the unforeseeable business circumstances exception — if not harder".
Further, they said, even if an employer is required to show just cause, the district court still erred by "hastily concluding" that the COVID-19 pandemic was not the direct cause of the layoffs.
"The court's conclusion rests on a faulty premise — that a natural disaster must destroy infrastructure in order to be the direct cause of a plant closing or mass layoff under WARN," the amici said. "That's too narrow a view of natural disasters and business operations."
Because Enterprise requires labor supply and customers — both of which were upset by the pandemic — COVID-19 is no less the cause of the layoffs than a disaster that destroys physical capital, they argued.
"The court also improperly concluded that a natural disaster cannot possibly be a direct cause when it temporarily upsets economic forces; assuming direct cause is the right level of causation, a natural disaster can be the direct cause of layoffs by directly affecting demand for the employer's goods and services," they said.
Reasonable people could conclude that the layoffs were directly linked to the pandemic through a "short, single chain of events," the business groups argued.
Two fired Sunshine State workers sued Enterprise Holdings — the parent of car rental firms
Enterprise Rent-A-Car, Alamo Rent a Car and others — last year, asserting they were sent home with just a few days' warning or no notice at all. They sought to represent a class of Florida workers who were similarly terminated this spring.
In January, U.S. District Judge Roy B. Dalton
refused to derail the proposed class case alleging Enterprise violated the WARN Act when it axed hundreds of Florida workers this spring. While he agreed that the global health crisis could qualify as a "natural disaster" under the law's definitions, he said one major caveat knocks it out of play. The loophole is only triggered when a plant closing or mass layoff comes as the "direct result" of a natural disaster, and the judge found the pandemic only indirectly influenced Enterprise's terminations.
"While COVID-19 may be a natural disaster within the meaning of the WARN Act, the complaint does not allege the layoffs resulted directly from the pandemic," the judge said. "The complaint (and unfortunate experience) shows a more tenuous connection: COVID-19 caused global concern over the spread of the virus, leading to a global shutdown — travel stalled, as did economies."
The business downturn Enterprise experienced because of the pandemic prompted the terminations, not the pandemic itself, Judge Dalton argued.
"This isn't a situation where, for example, a factory was destroyed overnight by a massive flood — that would be a 'direct result' of a natural disaster," he said. "This is an indirect result — more akin to a factory that closes after nearby flooding depressed the local economy."
In February, however, he granted a motion by Enterprise to certify the January decision for
interlocutory review by the Eleventh Circuit.
On Wednesday, the business groups weighed in, arguing that the decision will affect more companies than just the rental car behemoth.
"While Enterprise was profoundly affected by the global COVID-19 pandemic — which decimated its car rental business — the COVID-19 pandemic affected a broad array of businesses whose interests are represented by the Amici, including manufacturers, retailers, service providers, hotels, restaurants, and others," they said.
Representatives for the parties did not immediately respond to requests for comment Thursday.
The Chamber is represented by Philip A. Miscimarra and Bryan Killian of
Morgan Lewis & Bockius LLP.
The fired employees are represented by Brandon J. Hill and Luis A. Cabassa of
Wenzel Fenton Cabassa PA.
Enterprise is represented by Jason C. Schwartz and Brian Richman of
Gibson Dunn & Crutcher LLP, and Christina M. Kennedy and Michael D. Leffel of
Foley & Lardner LLP.
The case is Benson et al. v. Enterprise Leasing Co. of Florida LLC et al., case number
21-11911, in the
U.S. Court of Appeals for the Eleventh Circuit.
--Additional reporting by Kevin Stawicki, Anne Cullen, Braden Campbell and Carolina Bolado. Editing by Adam LoBelia.
For a reprint of this article, please contact reprints@law360.com.